Transfer of Liability from Branch 1 to Branch 2, A/C. Company 1.

Mr. Z

Address….

Dear Sir,

Re: Transfer of Liability from Branch 1 to Branch 2, A/C. Company 1.

We refer to your letter No. ……………… dated 19.05.2002 on the above subject.

We have perused the papers/documents referred to us.

The Facts

We understand that Company 1 (the “Company”) having place of business ……………. and factory at Plot No. A-22, ……………. was sanctioned the following facilities by the Bank’s Branch 1 were approved in favour of the Company in April, 2000:

(i) US$ 28,000.00 For opening L/C(s) to import machinery from Taiwan for the Company’s printing and packaging industry.
(ii) Tk. 10.00 lac Time loan facility to retire import documents against importation of machinery as stated in (i) above.
(iii) Tk. 10.00 lac Overdraft limit facility to meet working capital requirement for the Company’s printing and packaging industry.

The facilities were secured by the following:

1.                  Hypothecation of machinery and equipment, which have been set up and stored and will be stored at the Company’s factory premises at Plot No. 22, …………………………

2.                  Registered mortgage of the following properties:

(a)    10.33 decimals of land along with a two storied building at Plot No. 22, …………………… The property stands in the name of Mr. x, the Managing Director of the Company.

(b)   4 katha land at C.S. and S.A. Plot No. 250, Hal 325, C.S. Khatian No. 214, S.A. Khatian No. 215/2, Mouza: Dhopati, P.S. Fatullah, District: Narayanganj. The property stands in the name of Mr. y, son of ……………..

The overdraft limit has been renewed in October, 2001 with validity up to 15.04.2002 vide Sanction Letter No. ………………….. dated 21.10.2001. But the time loan of Tk. 10.00 lac became overdue as the Company failed to adjust the liability within the stipulated time. However, upon the Company’s request the time loan facility has been rescheduled in September, 2001 with validity up to 30.09.2002 vide letter dated 26.09.2001.

Recently, the Company by letter dated 03.04.2002 has approached the Bank for transfer of their entire liabilities on account of their overdraft limit and time loan facility from the Bank’s Branch 1 to Branch 2 for their personal requirement.

It appears that since the Company’s factory is situated in ………………. and it would be convenient for them to run their banking activities in connection with running of the printing and packaging industry with a bank situated nearby. Mr. x, the Managing Director of the Company is also the proprietor of COMPANY 1, a valued client of the Bank’s Branch 2.

By letter dated 14.05.2002, the Bank’s Branch 2 has opined that the liabilities of the Company may be transferred from Branch 1to Branch 2 for recovery purpose.

In such a situation, you have sought our opinion as to whether the Bank may transfer the liabilities, as requested by the Company, from Branch 1to Branch 2 without hampering the interest of the Bank and if so, the formalities/procedures to be followed by the Bank in doing the same.

Our Opinion

There is no legal bar in transferring the liabilities of the Company from Branch 1to Branch 2. However, to protect the Bank’s interests, before transferring the account along with the liabilities, we suggest that the Company should complete the following formalities with the Branch 2.

1.                  Branch 2 should obtain all usual charge documents i.e. promissory note, letter of continuity, letter of revival, personal guarantees etc. in the prescribed form. The Branch should also obtain personal guarantees from all the directors of the Company and from the mortgagor.

2.                  A letter should be obtained from the Company to the effect that it has consent if the account along with the liabilities are transferred to the Branch 2.

3.                  Memorandum of Deposit of Title Deeds in favour of Branch 2 should be obtained confirming creation of equitable mortgage upon the property belonging to the mortgagors.

4.                  An agreement between the Bank, Company and the Mortgagors with regard to the transfer of liability and continuation of legal mortgage.

If you have any further query, please do not hesitate to contact the undersigned.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

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